floriankrach/carboncostliabilitiespowerutilities

Official Implementation of the paper "The Financial Impact of Carbon Emissions on Power Utilities Under Climate Scenarios"

Modelling of a Power Utility Firm

This is the official implementation of the paper The Financial Impact of Carbon Emissions on Power Utilities Under Climate Scenarios.

Installation & Requirements

This code was executed using Python 3.7.

To install requirements, download this Repo and cd into it.

Then create a new environment and install all dependencies and this repo. With conda:

conda create --name CarbonCost python=3.7
conda activate CarbonCost
pip install -r requirements.txt

Usage

• print values from paper:

  python run.py --function=print_values_from_paper

• power plant cost comparison:

  python run.py --function=plot_power_plant_cost_comparison --config=current_sold_capacity_config_1

• NGFS scenarios:

  python run.py --function=plot_running_default_prob_and_scenarios --config=ngfs_plot_config

• plot capacities and energy mix in the 3 energy mix scenarios:

  python run.py --function=plot_capacities_and_energy_mix --config=IRP2030_config_market_cal
  python run.py --function=plot_capacities_and_energy_mix --config=IRP2030_green_continue_config
  python run.py --function=plot_capacities_and_energy_mix --config=IRP2030_aggr_green_continue_config

  joint plot of the 3 energy mix scenarios:

  python run.py --function=multiplot --config=joint_rlz_cap_plot_config

• plot minimal electricity prices in the 3 energy mix scenarios:

  python run.py --function=plot_min_electricity_prices --config=IRP2030_config_market_cal_nolevy
  python run.py --function=plot_min_electricity_prices --config=IRP2030_green_continue_config_nolevy
  python run.py --function=plot_min_electricity_prices --config=IRP2030_aggr_green_continue_config_nolevy

  joint plot of the 3 energy mix scenarios:

  python run.py --function=multiplot --config=joint_min_elect_price_plot_config

• Base case:

  • calibrate the electricity model scaling factors to the market probabilities of default, with init_assets fixed to market value:

    python run.py --function=fit_electricity_price_scaling_factors --config=IRP2030_config_2

  • calibrate the electricity model scaling factors to the market probabilities of default, with smaller init_assets:

    python run.py --function=fit_electricity_price_scaling_factors --config=IRP2030_config_3

  • default probabilities and bond prices and with electricity model calibrated to the market probability of default

    python run.py --function=plot_mean_electricity_prices_for_MPPJ --config=IRP2030_config_market_cal
    python run.py --function=multiplot --config=joint_fitdefaultprobs_meanelecprice_plot_config
    python run.py --function=plot_running_default_prob_and_scenarios --config=IRP2030_config_market_cal
    python run.py --function=plot_bond_price_term_structure --config=IRP2030_config_market_cal
    python run.py --function=plot_running_default_prob_and_scenarios --config=IRP2030_config_market_cal1
    python run.py --function=multiplot --config=joint_defprob_bondprice_plot_config

• Green continuation: to decrease coal and increase renewables

  python run.py --function=plot_running_default_prob_and_scenarios --config=IRP2030_green_continue_config
  python run.py --function=plot_bond_price_term_structure --config=IRP2030_green_continue_config
  python run.py --function=plot_running_default_prob_and_scenarios --config=IRP2030_green_continue_config1

• Aggressive green continuation: with const coal and increase renewables & gas

  python run.py --function=plot_running_default_prob_and_scenarios --config=IRP2030_aggr_green_continue_config
  python run.py --function=plot_bond_price_term_structure --config=IRP2030_aggr_green_continue_config
  python run.py --function=plot_running_default_prob_and_scenarios --config=IRP2030_aggr_green_continue_config1

  joint plot:

  python run.py --function=multiplot --config=joint_defprob_instdefprob_bondprice_plot_config

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License

This code can be used in accordance with the LICENSE.

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Citation

If you use this code for your publications, please cite our paper: [The Financial Impact of Carbon Emissions on Power Utilities Under Climate Scenarios](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4571086.

@article{doi:10.1142/S0219024924500134,
author = {KRACH, FLORIAN and MACRINA, ANDREA and KANTER, ASHLEY and HAMPWAYE, EBA and HLALUKANA, SIPHOKAZI and RATEELE, NCHAKHA THATO},
title = {THE FINANCIAL IMPACT OF CARBON EMISSIONS ON POWER UTILITIES UNDER CLIMATE SCENARIOS},
journal = {International Journal of Theoretical and Applied Finance},
volume = {0},
number = {0},
pages = {2450013},
year = {0},
doi = {10.1142/S0219024924500134},
URL = {https://doi.org/10.1142/S0219024924500134}
}

---